Carriers see growth and revenue opportunity on our northern and southern borders

Looking down at the U.S.-Mexico border at places such as Laredo and Juarez, and you'll see millions of square feet of warehouse space. Almost every one of the 8,000 to 12,000 shipments crossing that border every day comes off a truck.

“Most southbound loads will stop at a Customs warehouse on the U.S. side before entering Mexico for inspection,” says Ryley. “There's usually a transhipping arrangement with a Mexican carrier or a U.S. carrier's Mexican affiliate.”

Ryley says the quantities and descriptions of cargo are checked, and the Mexican Customs brokers are not very tolerant of mistakes.

“The fines are disproportionate to the crime,” he says. “Even small issues can cause the freight to be confiscated. In the case of large mistakes, the Mexican Customs brokers can lose their licenses or even be thrown in jail.”

It often takes a day or more to clear a load, so it's very inefficient to try to run the same truck across the border to the destination. And that is before all the other impediments, such as language, permitting, insurance and immigration issues.

Most loads are driven across the border by transfer carriers that do nothing but wait in line to get into the other country. It's the same north and south bound. Once the load is in Mexico, or the U.S., a domestic carrier takes it to its destination.

If you're a Swift or a Schneider, you can rate cross-border transportation from door-to-door for your customer, using your domestic assets in either country and your customs brokerage services at the border. It can be a seamless transaction to the customer. But where does that leave carriers without the necessary Mexican infrastructure?

“Still very much in the game,” Ryley insists. “Small carriers and even owner-operators can be very competitive on a cross-dock movement where the freight comes off the trailer before crossing the border. That carrier is one link in the distribution chain, hauling to or from the U.S. address to the border for furtherance into or from Mexico. Non-asset 3PL logistics providers, like Transplace and other companies, make the movement seamless to the customer. The owner-operator can be very much a part of such a supply chain.”

Crossing borders is not something you do casually as was the case in the past.

Schneider's Wahba says there's help available at almost every step of the journey, but you need to ask for guidance before problems arise.

“Our company has all those resources internally, and while we don't often need them, they are indispensible at times,” he says. “For smaller carriers, third parties can help with the e-Manifest and ACE filings, permitting, special clearances like Department of Agriculture and others.”

As overseas transportation costs and Chinese labor cost continue to rise, many expect near-shoring to bring more manufacturing to the NAFTA region. That's where future growth potential lies.

Move that trailer for me

Point-to-point movement of domestic freight by foreign-based motor carriers, commonly referred to as cabotage, is against the law in both Canada and the United States.

Both countries have nearly identical cabotage rules that from 40,000 feet appear straightforward, but are in fact very complex. One in particular causes no end of confusion, anxiety and expense: trailer repositioning.

To over-simplify, foreign carriers are not allowed to shunt or reposition trailers dropped in the U.S. or Canada. For example, a U.S. carrier can drop a loaded trailer it has brought into Canada and pick up a different loaded trailer it plans to haul out of Canada. It cannot, however, move an empty trailer from one dock to another, or to a different shipper located across town or across the street.That is considered cabotage.

Both the American Trucking Associations and the Canadian Trucking Alliance are strongly in favor of modernizing some parts of the cabotage rules, particularly the repositioning rules.

“We're not talking about wide-open cabotage, but I think if anyone were to take a step back and look at the situation and see ... restrictions on something as simple as re-positioning an empty trailer, they would realize that this is an area that is crying out for reform,” says David Bradley, president of the CanadianTrucking Alliance.

There's hope that the current round of Canada-U.S. negotiations on a perimeter security agreement might get the ball rolling. In the meantime, be careful what you ask your drivers to do while on foreign soil. Penalties range from fines to equipment forfeiture.

Comments

1.Porter M. Corn[ April 02, 2013 @ 06:48AM ]

Excellent article Oliver but I'd like to point out that Mexico also has a system similar to ACE and e-manifest that has been in operation for over a year, although like Canada, they're still learning the system.